Philips 2015 Annual Report Download - page 90

Corporate governance 11.1
90 Annual Report 2015
achieve the objectives, (c) if necessary, the parameters
to be applied in relation to the strategy and (d)
corporate social responsibility issues that are relevant
to the Company.
The Executive Committee follows the Rules of
Procedure of the Board of Management and Executive
Committee, which set forth procedures for meetings,
resolutions and minutes. These Rules of Procedure are
published on the Company’s website.
(Term of) Appointment and conicts of
interests
Members of the Board of Management as well as the
CEO are appointed by the General Meeting of
Shareholders upon a binding recommendation drawn
up by the Supervisory Board after consultation with the
CEO. This binding recommendation may be overruled
by a resolution of the General Meeting of Shareholders
adopted by a simple majority of the votes cast and
representing at least one-third of the issued share
capital. If a simple majority of the votes cast is in favor
of the resolution to overrule the binding
recommendation, but such majority does not represent
at least one-third of the issued share capital, a new
meeting may be convened at which the resolution may
be passed by a simple majority of the votes cast,
regardless of the portion of the issued share capital
represented by such majority. In the event a binding
recommendation has been overruled, a new binding
recommendation shall be submitted to the General
Meeting of Shareholders. If such second binding
recommendation has been overruled, the General
Meeting of Shareholders shall be free to appoint a
board member.
Members of the Board of Management and the CEO are
appointed for a term of four years, it being understood
that this term expires at the end of the General Meeting
of Shareholders to be held in the fourth year after the
year of their appointment. Reappointment is possible
for consecutive terms of four years or, if applicable, until
a later retirement date or other contractual termination
date in the fourth year, unless the General Meeting of
Shareholders resolves otherwise. Members may be
suspended by the Supervisory Board and by the
General Meeting of Shareholders and dismissed by the
latter. Individual data on the members of the Board of
Management and Executive Committee are published
in chapter 8, Management, of this Annual Report.
The other members of the Executive Committee are
appointed, suspended and dismissed by the CEO,
subject to approval by the Supervisory Board.
The acceptance by a member of the Board of
Management of a position as a member of a
supervisory board or a position of non-executive
director in a one-tier board (Non-Executive
Directorship) at another company requires the approval
of the Supervisory Board. The Supervisory Board is
required to be notified of other important positions (to
be) held by a member of the Board of Management.
Under the Dutch Corporate Governance Code, no
member of the Board of Management shall hold more
than two Non-Executive Directorships at listed
companies, or is a chairman of a supervisory board or
one-tier board, other than of a Group company or
participating interest of the Company. Dutch legislation
provides for further limitations on the Non-Executive
Directorships. No member of the Board of Management
shall hold more than two Non-Executive Directorships
at ‘large’ companies (naamloze vennootschappen or
besloten vennootschappen) or ‘large’ foundations
(stichtingen) as defined under Dutch law and no
member of the Board of Management shall hold the
position of chairman of another one-tier board or the
position of chairman of another supervisory board. In
order for a company or foundation to be regarded as
large, it must meet at least two of the following criteria:
(i) the value of the assets according to the balance sheet
with explanatory notes, considering the acquisition or
manufacturing price, exceeds EUR 20 million; (ii) the net
turnover exceeds EUR 40 million; or (iii) the average
number of employees equals or exceeds 250. During
the financial year 2015 all members of the Board of
Management complied with the limitations on Non-
Executive Directorships described above.
Since 2013, Dutch legislation on board diversity
provided that the Company must pursue a policy of
having at least 30% of the seats on the Board of
Management held by men and at least 30% of the seats
held by women. The relevant rule ceased to have eect
on January 1, 2016, but a bill aimed at reintroducing the
rule was announced in November 2015. For more
details on board diversity please be referred to section
10.1, Report of the Corporate Governance and
Nomination & Selection Committee, of this Annual
Report.
Dutch legislation on conflicts of interests provides that
a member of the Board of Management may not
participate in the adoption of resolutions if he or she
has a direct or indirect personal conflict of interest with
the Company or related enterprise. If all members of the
Board of Management have a conflict, the resolution
concerned will be adopted by the Supervisory Board.
The Company’s corporate governance includes rules to
specify situations in which a (potential) conflict may
exist, to avoid (potential) conflicts of interests as much
as possible, and to deal with such conflicts should they
arise. The rules on conflicts of interests apply to the
other members of the Executive Committee
correspondingly.
Relevant matters relating to conflicts of interests, if any,
shall be mentioned in the Annual Report for the
financial year in question. No such matters have
occurred during the financial year 2015.